Crescat Capital’s commentary for the month ended May 2021, discussing their performance estimates.
For the first quarter of 2022, the Voss Value Fund returned -5.5% net of fees and expenses compared to a -7.5% total return for the Russell 2000 and a -4.6% total return for the S&P 500. According to a copy of the firm’s first-quarter letter to investors, a copy of which ValueWalk has been able Read More
Crescat Capital's May Performance
We are pleased to report that Crescat had a strong May across all strategies:
Performance was driven by our global fiat debasement macro theme which is the largest exposure across all Crescat strategies today. We express this theme through our activist precious metals’ positions. Seven of these positions contributed outstanding gains in May across our hedge funds and precious metals SMA: Eskay Mining, New Found Gold, Arizona Metals, Eloro Resources, Labrador Gold and Cabral Gold.
Each of these stock’s percentage gains for the month of May is shown in the chart below. While we share many of the concerns of the cryptocurrency crowd regarding fiat currency debasement and the need for inflation protection, it is important to note the divergence between precious metals and Bitcoin last month, which we also highlight in the below table. We believe this is just the beginning of a resurgence for gold and silver miners. Cryptocurrencies have no doubt become a popular trade, but perhaps they got a bit ahead of themselves. Meanwhile, they are coming under increased regulatory scrutiny which adds additional risk. May was a great month to illustrate the old-fashioned inflation hedge properties that precious metals can offer alongside the new fashion trend. We prefer to focus on an uncrowded macro opportunity today, which we believe to be the exploration segment of the precious metals mining industry.
Our equity short positions in the Global Macro and Long/Short funds held us back by only a marginal amount in May. We remain committed to shorting overvalued equities in our Global Macro and Long/Short hedge funds as part of our overriding Great Rotation theme. With inflationary pressures rising from all three major macro drivers in the economy today: demand, supply, and monetary dilution, we believe investors will be rotating out of over-valued long duration financial assets and into undervalued commodity cyclicals and inflation hedge assets, including scarce natural resource stocks. First and foremost, we see a coming renaissance in precious metals exploration stocks after a decade long bear market for this segment of the industry that only ended in March of last year.
Crescat has partnered with world-renowned exploration geologist, Quinton Hennigh, PhD, to identify a portfolio of companies with the most prospective gold and silver deposits on the planet that will feed the next generation of mines. We are leading the charge to fund exploration and discovery of the new, large, high grade deposits to fill the supply void left by the majors after ten years of underinvestment.
We think gold and silver are in the process of resuming a secular bull market after eight months of consolidation that began in August 2020. Silver looks to be forming a similar technical set up that it did prior to its explosive move last year. It is also important to note that we are now seeing unprecedented amounts of capital flowing into silver related ETFs. Our hunch is that precious metals are getting ready for another major move to the upside that is likely to be led by silver.
For more of our research and information on our strategies, please go to Crescat’s website or directly to the following links:
- May Research Letter: Three Pillars of Inflation
- YouTube channel
- Crescat Gets Activist on Gold #33, “Nevada Day”
- Macro Presentation Video
- Firm Presentation
- Activist Precious Metals Deck
Crescat Capital is a global macro asset management firm. Our mission is to grow and protect wealth over the long term. Our goal is industry leading absolute and risk-adjusted returns over complete business cycles with low correlation to common benchmarks. We encourage you to reach out to a Crescat representative to learn more about any of our five strategies, you can find both Marek Iwahashi and Cassie Fischer’s contact information below.
Kevin C. Smith, CFA
Member & CIO
Member & Portfolio Manager
For more information including how to invest, please contact:
Client Service Associate
Client Service Associate
Linda Carleu Smith, CPA
Member & COO
© 2021 Crescat Capital LLC